iridium india telecom ltd Management discussions

IRIDIUM INDIA TELECOM LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS Financial Results For the For the Year ended Period ended 31.03.2008 31.03.2007 (Rs mm) (Rs mn) Total Income 3.09 0.63 Total Expenses 280.31 163.36 Income/(Loss) (277.22) (163.37) Operations: In the Civil Suit filed by the Company against Motorola Inc and Iridium LLC and others for recovery of Rs 377,21,54,857/- for the loss and damage caused and suffered by the Company and for recovery of. US. $.120,490,000 made towards equity investments in Iridium LLC, the Division Bench of the Hon able Bombay High Court directed Motorola Inc to deposit a sum of US $ 120,490,000/- in the Court . Against this order Motorola Inc filed a Special Leave Petiiion in the Hon able Supreme Court admitted the SLP and directed Motorola Inc to deposit Rs 200 Crores in a separate Bank Account. Motorola Inc has deposited the said amount. The Company had filed Criminal Complaint against Motorola Inc and its officials under section 420 read with 120 B of the IPC with the Magistrate, Pune (Kirkee Court). The Company has now filed a Special Leave Petition in the Supreme Court against the judgment and order passed by the Single Judge of the Bombay High Court quashing the criminal compliant filed by the Company against all the accused. Apart from the above two cases, details of other legal cases where the Company is involved are given alongwith the account statement. During the year all the fixed assets in the books of accounts except building have been sold in execution of the Recovery Certificate obtained by the State Bank of India in the proceedings filed by it against the Company before the Debt Recovery Tribunal, Mumbai The Auditors have qualified their report in respect of financials of the Company for the Financial Year ended March 31, 2008. The response to audit qualification are as follows: (a) The accounts have been prepared on ongoing concern basis since, Operation of Iridium LLC, US, i.e. parent company had been taken over by Collusy Group. Although the license previously held by the Company has been surrendered to The Department Of Telecommunication, Government of India and there could be possibilities to recommence the services of the Company. Till a final decision is taken in this regard, the financial statements of the Company are being prepared on a going concern basis (b) The non-provisioning of interest expenses in the current financial year. As a sequel of the stopping of the commercial operations of the company on March 18, 2000, the company does not have the requisite finances to pay such expenses. Besides this, if such expenses are provided then it would entail making a payment of tax to be deducted to the government. Hence it was decided in the Board Meeting which adopted the accounts for March 2000 that interest cost should not be provided in the books wherever there is a tax implication (c) The penal interest has not been provided on the State Bank of India loan as the loan agreement does not provide for the same (d) As regards statement due from Oman international Bank the same could not be obtained even after writing jo the bank. Similarly the company tried to obtain the balance co nf rmations -from parties as mentioned in the auditors report but were unable to obtain the same due to lack of response (c) There exist an internaLaudit system, but due to lack of activity only review was done by the Internal auditors M/s Ambekar & Joshi, Chartered Accountants, Pune Future Outlook: The Company has sustained accumulated losses. Iridium LLC, which provides the space segment had gone into liquidation and stopped commercial operations. As a sequel of this the Company has to stop commercial operations on March 18, 2000